AMT Relief

* * Congress Approves AMT Patch * *

Yesterday, the House approved the previously passed Senate version of the Tax Increase Prevention Act of 2007 (H.R. 3996). The president is expected to sign the bill. The Act provides for a one-year patch of the AMT for 2007 but does not offset the revenue cost with revenue raising provisions.

The AMT exemption amounts before phase-out for 2007 for individuals are:

- $66,250 for married individuals filing jointly and surviving spouses;
- $44,350 for unmarried individuals; and
- $33,125 for married individuals filing separately.

This is a temporary fix only. Without future Congressional action, the AMT exemption amounts for individuals in 2008 will revert to 2000 levels.

In addition, personal nonrefundable credits may offset AMT and regular tax. For tax years beginning in 2007, the combined total of the following credits is limited to the sum of: (1) regular tax liability reduced by the foreign tax credit, and (2) the AMT:

- Dependent care credit;
- Credit for the elderly and permanently and totally disabled;
- Mortgage credit;
- Child tax credit;
- Hope and Lifetime Learning credits;
- Adoption credit;
- Saver's credit;
- Nonbusiness energy property credit for energy-efficient improvements to a principal residence;
- Residential energy efficient property credit for photovoltaic, solar hot water, and fuel cell property added to a residence; and
- First-time D.C. homebuyer credit.

Again, absent future Congressional action, personal nonrefundable credits, with the exception of the child tax credit, adoption credit, and the saver's credit, can't exceed the excess of regular tax liability over tentative minimum tax in 2008.

The IRS has not commented on when they intend to begin processing tax returns. NATP has been told that the IRS will need seven weeks to program their systems to accept returns once the AMT patch is signed into law. This pushes back the start of filing season, and the IRS's readiness to accept returns, to early to mid-February. The IRS has indicated that they will post revised copies of the twelve tax forms impacted by the AMT legislation to www.irs.gov within 72 hours after the AMT patch is signed into law.

AMT (A Miserable Tax)

I am passing on a notice that I received from one of my tax organizations. The AMT tax for 2007 taxes will be a nightmare for many people if Congress does not increase the AMT exemptions like we had in 2006. And even if they act soon (who knows if they even will) it could delay thousands of tax refunds because all the IRS forms would need to be changed. This is a prime example of the laziness and horribly inefficient Congress that we have in this country. Sorry to preach but this is so frustrating to me as a tax preparer and a taxpayer.

Judy


* AMT Update * *

The current situation concerning alternative minimum tax (AMT) is foremost on the minds of everyone from taxpayers to our Congressional leaders. The most recent statistics reveal that late enactment of the AMT fix would affect up to 50 million taxpayers and delay $75 billion in refunds, as many tax calculations flow through the AMT.

According to Acting IRS Commissioner, Linda Stiff, the IRS will need ten weeks after Congress enacts the AMT patch before it can process affected returns. Refunds could be delayed, she said. The 2008 filing season starts on January 14, 2008, leaving very little time for the IRS to react.

At present, both houses of Congress have proposed and passed bills containing legislation to increase the AMT exemptions for 2007. However, none of these bills have made it to the President's desk for signature. There is no way of knowing at this point what will pass, or when.

Affordable Financial Advice

As many of you know, I am a proud member of Cambridge Advisors and it is nice to see us mentioned in this article as one of the few financial planning groups that works with "real people" and offers affordable financial advice. The article also mentions NAPFA, the largest group of fee-only advisors and I have been a member of NAPFA since 1997. Remember--there is a HUGE difference between commissioned stock brokers and fee-only financial planners.

Judy Stewart

Affordable, more reliable financial advice

Wed Nov 14, 2007 9:58am EST

By Linda Stern

WASHINGTON (Reuters) - Here's some good news from the world of money: The quality of professional financial advice is getting better and more affordable, just in time for all the folks who are probably feeling overwhelmed by the myriad details of their own financial lives.

Advisers are increasingly eschewing commissions to give straightforward advice, boosting their use of technology to provide better services, and tailoring recommendations to the needs of their clients, mainly because the market demands it.

"Consumers are getting smarter and realizing there are a lot of advisers out there who are calling themselves planners, but are product focused," says Susan Black, director of financial planning at eMoney Advisor, a company that provides the technology that many advisers use. "They are more discerning about what types of advisers they wish to trust."

Which is not to say there aren't still some incompetent, fraudulent or compromised practitioners out there. But it may be easier to avoid them and get exactly the advice you need, if you hire a planner according to these guidelines.

-- Competence is still key. It's not good enough to have an honest adviser if he is not very bright or knowledgeable. Look for one who has been in the business long enough to have weathered a couple of bubbles and bursts. They should have decent credentials, such as a CFP (certified financial planner) or a CFA (chartered financial analyst), and state-of-the-art portfolio management tools. Not to mention an investment philosophy they can explain to you in a way that makes sense.

Some private advisory networks require their members to meet additional quality standards. Some to check are the Alliance of Cambridge Advisors (www.cambridgeadvisors.com) and the Paladin Registry (www.paladinregistry.com/).

-- You should be paying them, and they should be working for you as a fiduciary. That leaves out brokers who might be nice guys but who make their money selling investment products. There is a conflict inherent in that arrangement, and an ample amount of research demonstrating that it fails to result in good returns for customers.

The designation "fee-based" clouds the water. Only "fee-only" advisers eschew all payments for products. If a fee-only adviser wants to recommend a product that he can't find without a commission, such as a certain kind of insurance, he should then reduce your fee by exactly the amount of the commission. That removes his financial incentive for choosing that product. You can find fee-only advisers at the National Association of Personal Financial Advisors (www.napfa.org).

-- One adviser might not be enough. Even the best stock market guru won't know everything about taxes, or estate planning or college saving or retirement savings rules. A great financial plan includes all of those pieces, so that leaves consumers with a few choices: You can find a planning firm that is big enough to integrate all of these specialties, or you can parcel it out and hire different experts to advise on separate pieces. You might want a certified public accountant, an actuary, and a lawyer or two to tackle different pieces of your comprehensive plan. In that case, you might want a financial planner who will offer by-the-question advice, or suggest investments you could buy for yourself. You can find experts willing to pass on their smarts by the hour at the Garrett Planning Network (www.garrettplanningnetwork.com).

-- Bells and whistles are nice -- if you are willing to pay for them. A full-service financial advisory firm that manages all of your money (and extracts a percentage or so of it for that service) should do more. The most up-to-date, full-service advisers will give you on-the-road access to all of your accounts, consolidated in one place, says Black.

They may even offer to track your frequent flyer, hotel club or credit card points. And they will call you, just to chat, during times like last week when many portfolios lost 4 percent or more in just a few days. Because the true value of a good adviser isn't just in the degree and the software, it's in the relationship that will see you through the kind of marketplace confusion that sent you for help in the first place.

(Linda Stern is a freelance writer. Any opinions in the column are solely those of Ms. Stern. You can e-mail her at lindastern(at)aol.com)

Beware of Email Scams

IRS Warns of New E-Mail Scam * *

The IRS is warning taxpayers to be on the lookout for a new e-mail scam that appears to be a solicitation from the IRS and the U.S. government for charitable contributions to victims of the recent Southern California wildfires.

In an effort to appear legitimate, the bogus e-mails include text from an actual speech about the wildfires by a member of the California Assembly. The scam e-mail urges recipients to click on a link, which then opens what appears to be the IRS website but which is, in fact, a fake. An item on the phony website urges donations and includes a link that opens a donation form which requests the recipient's personal and financial information.

The IRS also believes that clicking on the link downloads malware, or malicious software, onto the recipient's computer. The malware will steal passwords and other account information it finds on the victim's computer system and send them to the scamster.

The IRS does not send e-mails soliciting charitable donations. As a rule, the IRS does not send unsolicited e-mails or ask for personal and financial information via e-mail. The IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

Enjoying a Low-Cost Retirement

Enjoy a low-cost retirement

Your later years can be golden without being gold-plated. Most retirees are frugal by necessity, but they're no less happy.

By U.S. News & World Report

Having spent much of his career helping others with their finances, Don Peterson knew the importance of saving as much as possible before retiring. But when the stockbroker left the work force in 1988, he realized that retirement wasn't just about money.

In his case, Peterson, now 82, retired a bit sooner than he had planned -- and with less money in the bank.

But that was partly due to bad timing. Shortly after a few of his investments went bad in the 1987 market crash, his wife, Bobbie, decided it was time to retire from her career as a hospital laboratory administrator. Soon after that, one of the couple's daughters asked them to move from Eau Claire, Wis., to Nashville, Tenn., to be closer to her and the grandchildren.

So even though the Petersons had less than $100,000 in their accounts and just one pension between them -- hers, which paid out only around $500 a month -- they quit their 9-to-5 lives and shuffled off to Music City.

Their challenge was one that millions of older Americans are faced with every day: finding a way to lead a comfortable and, yes, happy retirement with only a modest nest egg.

For the vast majority of today's older workers, this is the reality of retiring in America. While financial planners and retirement experts debate how many millions of dollars families should save -- and how to invest that money to make it last -- most households are retiring on meager sums. Nearly two-thirds of workers 55 and older have less than $100,000 saved for their golden years, according to a recent study by the Employee Benefit Research Institute. And 56% of those workers who are already retired have less than $50,000 to last them for the rest of their lives.

Learning to cut back

Yet somehow, "people often find a way to get by," says Gayle Oboy, a financial planner in Marion, Ohio, who works with many middle- and working-class clients. "They adjust. They find ways to cut back but still be content."

In fact, studies show that more than 60% of seniors find retirement "very satisfying." Most say retirement is more satisfying than their working careers were.

Sometimes, it does take a bit of creativity. The Petersons, for instance, leveraged two assets they had -- time and a love of animals -- and started a pet-sitting business after "retiring" to Nashville. It wasn't a glamorous job -- "my wife jokingly says I have a Ph.D. in cat litter," Don Peterson says.

But the modest income they derived from dog- and cat-sitting "made all the difference in the world," he says. "It helped pay for the groceries and helped cover property taxes." It also gave the couple the freedom to retire on their own terms.

Those who don't want to or can't work during retirement are starting to take advantage of another asset: their homes. Thanks to the run-up in home values during this decade, some retirees are starting to downsize to cheaper digs and using the remainder of their home equity to finance retirement, says Jean Setzfand, the director of financial security for AARP, the nation's largest advocacy group for older Americans.

Others are choosing to relocate to less expensive parts of the country, which is what the Petersons did. "It's an insurance policy of sorts," Setzfand says.

What's more, a small but growing number of seniors are opting to supplement their retirement income through so-called reverse mortgages. By taking out this type of loan, you can receive a certain amount of your home equity in a lump sum, a line of credit or monthly annuity payments for life -- while still living in your home. And you don't have to repay the loan so long as you live in that house.

The catch is, when you die or move, the proceeds of the home sale will be used to repay the mortgage. And you have to be at least 62 and own a single-family residence to qualify for a government-insured reverse mortgage.

Because this involves the eventual sale of your home, Setzfand says, this strategy shouldn't be taken lightly. And keep in mind that like an annuity, the terms of the reverse mortgage will improve the longer you wait to take one out.

Of course, the simplest solution for some retirees is to find ways to limit spending --without sacrificing their retirement experience.

Take Gary Hutson. After retiring in 2001 following two decades as a railroad union leader, the 65-year-old now spends his time in far less stressful circumstances. Hutson and his wife, Kathy, are both artists in Spokane, Wash., and they use their free time -- and the serene backdrop of eastern Washington -- to paint wildlife scenes, carve wooden and metal sculptures, and do beadwork.

When the Hutsons aren't creating artwork, they find plenty of other low-cost activities. For example, "we love garage sale-ing," says Kathy. And they also take frequent trips to a cabin they inherited on a lake 45 miles away.

Watching expenses go down

The good news for cost-conscious retirees: "All the numbers show that you don't need the same amount of money in retirement as you needed before," says Alicia Munnell, the head of the Center for Retirement Research at Boston College.

Once you retire, you stop saving for retirement. Your taxes are often lower because your income is likely to drop. "And you don't need to buy work clothes or take transportation to work," Munnell says.

Workers making $40,000 to $90,000 a year need to replace about 75% to 80% of their pre-retirement income, on average, according to a 2004 analysis by Georgia State University and insurance giant Aon. So if you earned $40,000, you would need to generate about $32,000 in annual income to live as comfortably in retirement as you did during your working career.

And for the current generation of retirees, Social Security still covers around a third to more than half that amount, depending on income. So if you earned $40,000, you may need to generate only about $11,600 a year on your own -- or through a pension, if you have one -- to maintain your standard of living in retirement.

OK, but what if you still fall short?

"The answer with the biggest payoff is employment," Munnell says. Not only does finding work boost your current income, but it also delays having to tap your personal resources. And the longer that you can keep money in tax-deferred accounts like 401(k)s and IRAs, the better. Plus, by working a bit longer, says Rande Spiegelman, the vice president for financial planning at the Schwab Center for Investment Research, you may be able to wait before drawing your Social Security benefits.

That's what Marlene Adams did. A decade ago, the Torrance, Calif., resident was all set for a traditional retirement when the utility company where she worked offered her a modest buyout package. Adams was then 55 and thinking of funding her retirement with private savings first, followed by early Social Security benefits.

But after talking to a financial planner, she took a temp job instead, and it eventually turned into a full-time position working in customer service for an air-freight company. By doing so, Adams was able to hold off on taking Social Security until her full retirement age of 65 (that age has been pushed back to 67 for those born in 1960 and later). And that increased her Social Security payments from around $1,200 a month to $1,650.

Now, after paying her rent, she still has about $500 left over each month, and that's not counting her personal savings. "I feel like I'm blessed," says Adams, who is close to retiring for good.

To be sure, not everyone can find full-time work later in life as Adams did. In fact, many workers mistakenly assume they'll be able to keep working to cover any financial gaps. A recent Employee Benefit Research Institute survey indicated that most workers plan to retire at 65 or older. But in reality, nearly two in three Americans wind up leaving the work force before they reach 65, often because of unexpected health problems or layoffs.

Working for spending money

But even if you can't work full time, small jobs can help. Just ask Roy Walls, another Californian. Walls, a former equipment manager for an aerospace company, retired in 1999 at 62 with an early-retirement package. Between his pension and Social Security, he and his wife, Loretta, lead a relatively comfortable retirement. Still, Walls decided to take a part-time job as a crossing guard for a nearby school district. During the school year, Walls helps kids cross the streets near his home for about an hour and 15 minutes each morning and 45 minutes in the afternoon.

The job pays less than $5,000 a year. But that money helps cover the cost of dinners out and movies on the weekend, Walls says. And it allowed him to recently help a son out financially, without having to dip into his savings.

For those without pensions to fall back on, earning even a few thousand dollars a year can be the difference between outliving your money and your money outliving you. Academic research shows that you probably can't afford to withdraw more than 4% or 5% of your nest egg each year. That means if you saved $250,000, you could withdraw no more than $12,500 annually.

But what if you needed $17,500 a year -- in addition to Social Security and other benefits -- to maintain your lifestyle? Well, says Schwab's Spiegelman, instead of tapping 7% of your account, which might deplete it too quickly, why not get a part-time job paying $5,000? That way, you can keep your withdrawal rate at the safe 5% level and still meet your income needs.

It's one of the ironies of retirement, Spiegelman says. Workers are taught that to retire well, they need to save huge amounts of money. "Yet small amounts of money can still make all the difference," he says. And that's what a new generation of retirees is finding out.

This article was reported and written by Paul J. Lim and Emily Brandon for U.S. News & World Report.

Published May 24, 2007

Year End Tax Tips

Here are some tax tips to think about before year end. If you have any questions, please don't hesitate to contact us.


1. You can contribute to your IRA or Roth IRA for 2007 as long as you do it by April 15, 2008. If your income is too high to make a contribution to your IRA or Roth IRA, you can always contribute to a non-deductible IRA. Your contribution may be as much as $4,000 + an additional $1,000 if you're over 50 years of age. If you participate in a retirement plan at work, deductible IRAs are limited and phaseouts apply to Roth IRAs.

2. Saver’s Credit – if you contribute to your retirement plan at work (e.g. 401(k)) and your income is lower than the income thresholds (less than $25,000 to less than $50,000 depending upon your filing status), you qualify for the Saver’s Credit. Even if you don’t qualify for the credit, make sure you’re saving for retirement little by little each and every pay period.

3. The sales tax deduction is back through December 31, 2007. If you itemize your deductions, we'll deduct the larger of the two deductions (sales taxes or state income taxes). If you purchased a car or boat or RV, the amount you paid in sales taxes is added to the published IRS Table amount. This doesn't apply to sales tax paid on business items because those taxes are already deductible to you.

4. If you’re covered by Medicare and you’re considered high income, you can expect a Medicare Part B surcharge in 2007 and it can triple by 2009. The surcharge is based upon 2005 income. The surcharge begins at adjusted gross income of over $80,000 if you’re single and $160,000 if you’re married. If your income has decreased since 2005, you can dispute the surcharge.

5. 529 Plans have been made permanent. As you recall, 529 Plans allow you to contribute to a college account and if the funds are used for higher education, any amount you pull out is tax free.

6. The lower 15% tax rates on long-term capital gains (held over 1 year + 1 day) and qualified dividends have been extended through 2010.

7. Do you remember the Kiddie Tax where kids were taxed at their parent’s income tax rate if they were over 14. Congress changed the age to over 18.

8. The gift tax limit increased from $11,000 to $12,000.

9. As of August 17, 2006, non-cash charitable deductions require more details. You cannot simply say “3 bags of clothing.” A list of what you contributed is required. If you have not received my Deduct It! book, please let me know.

10. Beginning in 2007, cash charitable contributions require a receipt from the charity. This means that if you attend church on Sunday and put $10.00 in the collection plate, you cannot take a deduction without a receipt from your church. If you pay by check, your cancelled check is your receipt. This also applies to cash you contribute to the Salvation Army Kettle at your local market, so get a receipt! This is also new: the receipt from any charity should state that “no goods or services were provided in consideration of the gift.”

11. Charitable travel – you can still deduct local charitable mileage at 14 cents per mile, but you can no longer deduct charitable travel unless there is “no significant element of personal pleasure.” If you travel for a charity (a chorus, symphony, fraternal organization, etc.), you cannot deduct your expenses unless you can prove that all or most of that trip was directly related to the charitable work.

12. Use Tax: this is an area that is under more scrutiny. If you purchased something on the Internet and did not pay sales tax, you are required to pay sales tax to your state when you file your tax return. Let me know if this is the case with you.

13. Home equity interest – unless you substantially improve your home with the money from a home equity loan, the mortgage interest deduction may be limited. Don’t forget home equity debt is generally limited to $100,000 to be able to deduct the interest.

14. Office in Home – if you have an office in home, your office must be used exclusively for your business (very little personal use), and regularly for your business. Also, the 1st trip of the day from your qualified home office is not deductible. It is considered part of your commute. The trips after that 1st stop of the day are deductible business miles if the stop is business related.

15. Telephone expense: if you have a business that you operate in your home, you must have a separate business telephone line to deduct your telephone. If you have a personal phone from which you make business calls, you may deduct only the business long-distance amount as telephone expense.

16. There is a new Domestic Production Deduction for businesses that construct or manufacture. This would include contractors who build or do substantial renovation of a property. Remodels qualify. Repairs do not.

17. “Listed Property Deductions” – this is a category that includes cell phones, home computers, auto expenses, etc. The IRS looks at each expense separately and measures the time you use these items (personal versus business use) and the business purpose of each before you may deduct it. For example, I have a cell phone that is used a large percentage of time for business but also used for personal use so I cannot deduct 100%. Home computers are a problem, also. How much of the time do you spend on your computer that is personal use as opposed to business use?

18. Travel and Meal & Entertainment Expense: make sure you keep a log noting the name of the client, the purpose of the meeting, the cost, and how many people attended. Your American Express statement is not considered substantiation.

19. Business travel expense: keep a log of your business mileage. Without a mileage log, no deduction is allowed. Again, keep track of the name of the client and business purpose of the miles.

20. Forms 1099-MISC: if you paid more than $600 to a business or individual, you are required to issue Form 1099-MISC no later than January 31, 2008. If you do not issue the forms and you are audited, your deduction will not be allowed.

21. Section 179 increased to $108,000 in 2006. It’s $112,000 in 2007. California still allows only $25,000.

Warning for TD Ameritrade Account Holders

A colleague of mine informed me that one of his elderly clients was sent an email telling him that he could no longer log into his accounts and that he needed to provide his account number, last 4 digits of his social security number, his email address and his username. He started to provide much of this info and then realized that it may be a scam. It was a scam!
Due to the breach of security for many of the TD Ameritrade accounts, your email address may be in the hands of unscrupulous folks. So, please do not respond to ANY emails that claim to be from TD Ameritrade. TD Ameritrade will never ask you to put that kind of sensitive information in an email.
Always be on guard.

Africa Trip Blog

Dear Friends,

I want to take you with me as we travel to Africa so our group has created a blogspot that you can access and follow us on our journey. The website is http://themzungus.blogspot.com/ We are still working on this blog and adding new stuff every day. Thanks to Marcie Grube for creating this for us. We will do our best to journal on our trip but it depends on whether we can access the internet. We suggest that you check our blog on a regular basis and see what we are up to. We thank you for all your love, support and encouragement and most of all, your prayers, as we embark on this life changing journey.


Much love,

Mzungu Judy



"God is in the slums, in the cardboard boxes where the poor play house. God is in the silence of a mother who has infected her child with a virus that will end both their lives. God is in the cries heard under the rubble of war. God is in the debris of wasted opportunity and lives, AND GOD IS WITH US IF WE ARE WITH THEM."



Bono at the 2006 National Prayer Breakfast

Refinancing Your Home and Taxes

Is Your Home A Tax Trap?
If you've refinanced your mortgage, you may owe the IRS more than you thought

Have you refinanced your mortgage and taken a chunk of the equity in cash? Will you do so when your adjustable-rate loan resets its interest rate? If you fail to follow some little-known rules for calculating your home mortgage deduction, you may be writing off too much interest. Instead of saving on taxes, you could wind up owing them.

In general, the IRS lets you deduct 100% of the interest you pay on one or more home mortgages, up to a total loan value of $1 million. But when you refinance and withdraw cash, the rules change: Only the interest on your original mortgage balance, plus an additional $100,000, qualifies for a deduction. (If you want to take out more cash, use a home-equity loan or line of credit. The law allows a separate deduction for interest on borrowings of up to $100,000.)

It's easy to get this deduction wrong. Banks and mortgage companies send borrowers a Form 1098 early in the new year, which most use to prepare their taxes. This document shows total interest paid for the year, so many assume the number on the form is the one they should use in filing taxes. Schedule A, the tax form on which you enter home mortgage interest, makes no mention of limits on refi-related deductions, though the instruction booklet does.

Lenders seeking refi customers usually don't play up that little catch. "They have no incentive to educate borrowers about the tax consequences" of refinancing, says Douglas Dachille, CEO of First Principles Capital Management, a New York investment firm. Their promotions may include a fine-print caveat to check on the tax effects of a refinancing, but they don't spell out the rules. Dachille says this refi issue came to the fore when he was considering investing in subprime mortgage-backed securities. "The tax provision could affect homeowners' cash flow, so it's yet another reason to avoid the subprime market."

Here's how the refi tax trap works. Let's say you borrowed $500,000 at 8% in 1998 to buy your house. By 2003, the house had appreciated substantially and the mortgage balance had been whittled down to $450,000. Then you refinanced, taking a new loan of $650,000 at 6%. At tax time, Form 1098 would show that you forked over about $39,000 in interest on the $650,000 mortgage in 2003.

INCREASING INTEREST
If you use that $39,000 figure to calculate your annual mortgage interest deduction and you're in the 33% marginal tax bracket, you would wind up taking $1,980 more in deductions than you're entitled to, according to William Lazor, a CPA at Kronick Kalada Berdy in Kingston, Pa. That's because you may take a deduction on a mortgage of only $550,000—the $450,000 left on the original loan plus $100,000. On $550,000, the interest paid would be $33,000, says Lazor.

So what's the damage? If you had to repay the IRS for overdeducting, you would owe $2,109 including interest and penalties for one year, Lazor says. For three years, you'd be liable for more than $6,200. Greg Rosica, a tax partner at Ernst & Young in Tampa, says the IRS would not likely come after you for mistaken returns filed before 2004 because a three-year statute of limitations would probably apply.

There's no sign the IRS is currently hunting down taxpayers who may be miscalculating the mortgage deduction, but the error could trip you up in an audit. Rosica says the best way to protect yourself is to make sure you calculate this year's taxes correctly. If you've taken excessive deductions in past years, you can also file an amended return.




By Ellen Hoffman

TD Ameritrade and your accounts

There has been recent news reports about TD Ameritrade and the fact that some of their database information has been compromised. I attended an audio meeting this morning with the President/CEO of TD and he assured us that, according to the information that they have uncovered, that NO client social security numbers nor passwords were obtained by the hackers. It appears that the unauthorized codes found in their systems were being used to obtain email addresses for spam purposes.

I direct you to a special website that TD has put up and where you can obtain the information needed to put yourself at ease. It is www.amtd.com. I recommend that you check this out. You will also be receiving a letter from TD on the situation.

I remain confident that TD has taken steps to make sure that your assets are SAFE and that this problem can be corrected.

Please call us if you have any questions.

Warmly,

Judy

Judy is going to Africa!

Hello Everyone,

I wanted to let you know that I am going on a 2 week missions trip to Uganda and Kenya from September 30th thru October 13th. I am traveling with an amazing group of 5 other folks and we are a teaching team. We will be conducting business conferences/seminars and one on one coaching to enable folks to start and sustain their own businesses. Business failures in Uganda is the highest in the world! I am going through an organization called Global Partners in Development (www.globalpartnersindevelopment) and while in Uganda will be partnering with Shane Gilbert who has a ministry called www.comeletsdance.org Shane is doing amazing work in Kampala investing in and training up young men and women to be future leaders in their country. She is starting small micro businesses and is starting to see some great results. Shane is organizing the events in Kampala for our team. In Kenya, we will also be meeting with groups of people who are trying to break the "begging cycle" and become self-sufficient. At the end of our trip, we will take a 3 day "vacation" at the Maasai Mara wilderness to witness The Great Migration of animals traveling to the Mara Plains from the Serengeti.

Cheryl Tuz will be in the office while I am away and will be able to help you with any issues or concerns that arise while I am away. I am available until September 28th and starting October 15th--barring any jet lag!

I am most grateful for the opportunity to go on this trip and appreciate your good thoughts and prayers while I am traveling.

Warmly,

Judy

Finding the Joy

These are some excerpts from an article that I would like to share with you. I hope that find it worthwhile reading. Lately, I have been doing a lot of trying to find the joy in my life.

The Joy Factor
Mary L. Duwe, CPF, Master Coach

Everyone longs for a life filled with passion. The human heart was created to be passionate. However, personal and business stresses, disappointments and challenges can often act like cold water thrown on a campfire. Damaged relationships and other life challenges can take their toll and cause the fire of passion to simply burn out. You begin to feel less alive and hunger for the warmth of an inner burning fire.

There are three important steps you need to take in order to find meaning and passion in an industry filled with emotional disease, dismay and disappointing outcomes. It is possible to shift from running on empty to being filled with passion by simply incorporating the “joy factor” into your practice:

Step One: Find the joy. It is critical to discover what brings you true joy. It is all too often we find ourselves doing things we feel we have to do or should do instead of things we want to do. Start to pay closer attention to what gets your attention and ignites a spark inside you. This spark is an important clue in designing your life around what brings you the greatest amount of joy. However, finding what brings you joy will only be a booby prize if you do nothing with your new-found knowledge.

Step Two: Follow the joy. Knowing what brings you joy is critical. Step two is giving yourself permission to follow that joy and develop a life that is full of meaning, purpose and passion. There are several things I noticed that advisors often allow to get in the way of developing a passion-filled life: Often advisors will put themselves last on their list of priorities. As a result, everyone else’s needs get fulfilled before their own. We tend to give too much without getting refueled and as a result, can burn out. Running on empty is the fastest way I know to put out the fire of passion. Never give away more than you have to give and always end the day with something left in your tank.

Step Three: Foster the joy. Now that you have given yourself permission to follow the joy you’ve identified, it is equally important to develop your business and your life around those good feelings. Protect your right to have a life that is passion filled. Expand and create circumstances and opportunities that light the fire within you. You can do things that will drain your energy or you can choose to do things that give you energy. It is your choice. Eliminate anything that drains you and do more of what fuels your passion. The more alive you feel the more effective and powerful you will be.

IRS News

Closing the Gap

How the IRS is improving compliance to close the tax gap

From Investment Advisor Magazine | August 2007 Issue
By Les Witmer

August 1, 2007
The primary goal of the Internal Revenue Service is to collect the taxes that are owed to the federal government under current tax law. Reducing the difference between taxes legally owed and taxes actually paid in a timely manner— referred to as the “tax gap”—is a key objective of the IRS’s collection and examination efforts. A recent Tax Talk Today Webcast featured an expert panel of tax practitioners and IRS officials discussing the IRS’s efforts to encourage voluntary compliance with tax law.


The IRS estimates that, for tax year 2001, the gross tax gap had reached $345 billion. Three categories of non-compliant taxpayers make up the tax gap:


• Non-filing—the taxpayer files returns late, or not at all;


• Underpayment—the taxpayer files on time, but does not pay the full tax liability;


• Underreporting—the taxpayer files on time, but does not report her correct tax liability, often by overstating exemptions and deductions, or understating income.


How does the IRS propose to close the tax gap? Among other moves, it is stepping up activities in examination and collection, as well as proposing new federal legislation. The latest numbers on federal tax enforcement illustrate the IRS’s commitment to improve in this area (see sidebar). Kevin Brown, deputy commissioner for services and enforcement and the acting IRS commissioner, said that overall revenues are up, and the IRS is “quite pleased” with the level of service provided to taxpayers in a time when enforcement activities are increasingly successful.


“We need a balance between service and enforcement,” said Brown. “We can’t neglect one at the expense of the other, and we’re constantly seeking to improve in both areas.”


Brown and other IRS officials list these areas slated for change.


1) Examination. The IRS plans to improve its examination processes with a focus on two broad categories: balanced audit coverage, based on patterns of noncompliance; and egregious noncompliance, which would include abusive transactions. Expect to see an emphasis on examinations of high-risk taxpayers— including small businesses, self-employed individuals, and high-income individuals —that often have more complex returns and have exhibited a noticeable degree of noncompliance in the past.


“All of these are again designed around the tax gap…where examination appears to be the best way in closing the tax gap,” said Steve Burgess, director of examination in the small business/self-employed division of the IRS.


2) Collection. Taxpayers of all kinds tend to ignore or deny initial collection notices from the IRS, but waiting doesn’t change anything except the total amount of interest and penalties.


“The same ways to resolve a case are available at any point in collection,” said David Alito, director of collection in the small business/self-employed division.


The IRS currently uses two private debt collection agencies to assist with collection activities, although there have been several hearings on the program. While collection activities appear to be in a positive trend right now, the IRS is constantly looking for ways to improve its processes.
“We know we’re not going to get there one case at a time in collections, so we’re trying to take a step back,” said Alito.


3) Legislation. The IRS has 16 legislative proposals included in President Bush’s 2008 budget that were designed to improve information reporting and thus encourage voluntary compliance with tax law. Two key areas that may be affected by this proposed legislation are credit and debit card receipt reporting by merchants and basis reporting for publicly traded securities that are reported for capital gains transactions. By bolstering information reporting, the IRS expects to see an improvement in compliance.


“We know that, where there is information reporting, compliance is just much higher,” said Mark Mazur, director, research, analysis and statistics, in the national headquarters of the IRS.

Issue Resolution With the IRS
Any discussion of IRS efforts to improve examination and collection should also include a look at what options are available for issue resolution, the topic addressed in another recent Tax Talk Today Webcast. Depending upon the issue at hand, a variety of options for interaction with the IRS are available. The panel of IRS officials and tax professionals examined some of the current resolution systems and how they work, in particular, the Taxpayer Advocate Service.


The Taxpayer Advocate Service operates independently of the IRS and offers two distinct options for resolving federal tax issues: case advocacy and systemic advocacy. The type of advocacy needed depends on the type of case in question.


In case advocacy, local taxpayer advocates work with the tax practitioner or the taxpayer to resolve individual cases. Typical qualifying cases usually involve economic burden, such as a person on a fixed, limited income placed under levy; or systemic burden, in which the taxpayer has encountered an IRS process that is not working as intended. Extreme processing delays might qualify as a systemic burden. To submit a case for consideration, simply file a completed Form 911 with the Taxpayer Advocate Service.


The Taxpayer Advocate Service’s Office of Systemic Advocacy addresses larger problems that may arise within the IRS and create multiple, recurring problems for taxpayers. Systemic advocacy even provides an Internet-based system which taxpayers and tax practitioners alike can use to report suspected systemic problems. The link for reporting systemic problems can be found at www.irs.gov/advocate, but remember, the Office of Systemic Advocacy is not for case-specific problems. Tax Talk Today panelist Benson Goldstein, technical manager, taxation, with the American Institute of Certified Public Accountants, commented that AICPA often receives calls from tax pros about supposed systemic problems that actually are case-specific and should be dealt with by filing a Form 911 with the Taxpayer Advocate Service. Under systemic advocacy, the Taxpayer Advocate Service also provides an annual report to Congress, presented by the National Taxpayer Advocate, on the 20 (or more) most serious problems affecting taxpayers.


For both case and systemic advocacy, the Taxpayer Advocate Service has the authority to issue Taxpayer Assistance Orders for the benefit of the taxpayer. But the IRS cautions that not every troubled case will receive assistance from the Taxpayer Advocate Service. “Not every interaction that a taxpayer has with the IRS is necessarily a Taxpayer Advocate Service case,” said Matthew Weir, director of advocacy projects, systemic advocacy, with the IRS’s National Taxpayer Service. “Not every IRS levy is going to result in a Taxpayer Advocate Service case.”


The Taxpayer Advocate Service also takes certain cases that meet public policy criteria, such as issues associated with the IRS’ new private debt collection initiative.


The Office of Taxpayer Burden Reduction, while not a specific issue-resolution solution for the individual taxpayer, focuses on identifying ways in which the IRS can alleviate taxpayer burden. This office of the IRS is responsible for form simplification, process simplification, and the identification of new regulations that would streamline the taxpayer’s engagement with the IRS. The Office of Taxpayer Burden Reduction also helps to develop new legislative proposals for the Department of Treasury to consider as additional ways to ease the taxpayer burden. More ideas are always welcome, according to the IRS. “We do look to our tax professionals to give us ideas on simplification initiatives,” said Beth Tucker, director of communications, liaison and disclosure in the IRS’s small business/self-employed division.

Estimated Tax Payments

A huge time saver for me has been using the federal and state government's websites to pay my estimated taxes. If you are not a wage earner and are required to make estimated payments, I encourage you to take the time to set up your accounts and make your payments electroncially. The following verbage is from the Federal website:

Welcome to EFTPS Online, the official Website of the Electronic Federal Tax Payment System (EFTPS). A free service provided by the U.S. Department of the Treasury, EFTPS allows all federal tax payments to be made electronically. This includes corporate, excise and employment taxes, and 1040 quarterly estimated tax payments. EFTPS Online is an official and secure United States Government System that allows business taxpayers to eliminate paper Federal Tax Deposit coupons and individual taxpayers to eliminate paper vouchers. All taxpayers can benefit by streamlined processing, therefore, saving time, postage costs and money.

The website link is https://www.eftps.com/eftps/

The website is user friendly and guides you in setting up your account. The really nice thing is that you can schedule all your payments in advance for the entire tax year and never have to worry about missing a payment--being on vacation etc...

The Franchise Tax Board's website is http://www.ftb.ca.gov/online/webpay/index.asp

Unfortunately, the State is not as user friendly as the Federal site but with a little bit of patience, you can do the same thing.

If you try setting up your account and need help, please call and either Cheryl or I can help you. It really has made my life a lot easier!

Market Volatility

We have been experiencing quite a bit of market volatility lately and I am so proud of all our clients as we have not had one anxious call or email. Many of you are old hats at this as you have gone through the 2000, 2001 and 2002 down markets. And your portfolios survived because you were nicely diversified among several different asset classes such as large cap growth and value stocks, small cap, mid size and international stock funds. And you were grateful that the boring bonds, CDs and money markets provided growth and stability during the rough times. Well, it is no different now. Even though it seems that we have had heart stopping days, the stock market is actually up since January 1st. The international funds are still strong performers and those bonds, treasuries and CDs have been great shock absorbers. Because we do annual rebalancing, you are not reacting to the market like the masses. You are an educated, disciplined and non-emotional investor. And those of you who are in 401ks etc... and dollar cost buying into the market now, you are getting some nice bargains. Kind of like the half-yearly sale at Nordstrom's. The ladies can relate to that one! So, congratulations to all of you for keeping the faith and holding on.

Balanced and Meaningful Life

I found this article to be especially good and would like to share with you. I feel very blessed because I love the work that I do and feel it is meaningful work. If you are not feeling that way, then let's get together and talk about it.

Judy


Pursuing a Balanced and Meaningful Life
Mitch Anthony

The greatest investment challenge facing our culture is not centered on how to obtain material resources but on how to invest our lives. Survey after survey affirms the idea that the limited bucket of time carried by most Americans has a noticeable leak. The majority of respondents feel a constant stress and list having more personal time as a top priority. As people mature (when their “time” bucket is less than half full), they begin to notice this performance in their reservoir of time (an awareness of their mortality). When asked what they would do with their increased personal time, most respondents pointed to family, leisure, and activities that give them a sense of connectivity and meaning. Many midlife professionals speak of being tired of deferring satisfaction to a later date in life. Some are on their second family—having seen the price one often pays in all-consuming careers.

Advisor and author, Karen Ramsey, has captured this sentiment.

“Few people are able to find total satisfaction and contentment in work alone. We also need relationships with others in our lives—and the time needed to invest in those relationships. We often find ourselves too busy to spend time with those we love, and the rewards of our long hours of toil are rarely sufficient to fill the resulting void. To find harmony and balance in our lives, we may need to implement changes. That may mean doing what we want, rather than what everyone else expects.”

A job can be defined as a trade in which we exchange our time for someone else’s money. The fairness of that trade should be under constant scrutiny. The impact of that trade on other important aspects of our lives should be a point of perpetual examination. When people say they are feeling stressed and need more balance in their lives, they are really admitting that they have surrendered the locus of control of their most precious commodity—time. Would these same individuals give up control of their material assets and complain about the resulting stress and hopelessness of their predicament? Wise investors understand that time and energy also contains the seeds of compounding wealth. What is the point of putting your money in aggressive growth funds while your time and energy are in the equivalent of passbook savings or, worse, a losing enterprise?

Maybe what people are saying is that they are waking to the realization that it is not just the money that they want—there are more lasting prizes to be had. We have found that oftentimes these people are waiting for someone to “give permission” to think this way.

Author Mark Eisenson demonstrates that the investment metaphor cuts incisively to the soul of the materially focused but perplexed individual. He writes:

“Quality of life means different things to different people—each person’s definition is unique. But the important thing to realize is that your life is multifaceted and each facet contributes to the quality of life you experience. Each facet is an integral part of your “life portfolio” and your investments of time and energy are how you make that portfolio grow. Are they experiencing the “value” for your investment that you should expect? If not, it’s time to reevaluate and rebalance your portfolio. In the same way that a Wall Street investment appreciates in value, you want your investments of time and energy to offer high yields. They should make you feel good—happy, satisfied, energized, or relaxed. If you’re really lucky, they may even make you money.”

Like a sense of balance, our sense of meaning is also affected by our time investments. The word meaning can be abstract and difficult to define, leading to deep philosophical questions such as, “What is the meaning of life?” However, in terms of financial life planning, the more practical question is, “What is meaningful to me?” In other words, as clients design their future, the top criterion for investing time should be to spend time in a way that is meaningful.

Whether paid or unpaid, it is especially important that each individual’s work enhances his self-worth and personal identity. Do you know of any advisors who, although successful, seem not to be enjoying what they do? Such demeanors are often symptomatic of a disconnect at this level. Author Barbara Sher explains that the first step to finding work that “fits” you—in other words, matches your skills, interests, values and preferences—is to understand the connection between doing what you love and doing something worth doing. At that intersection you will find meaning. Sher writes: “When something really matters to you, you must bring it into your life. It’s a tribute to the success of our culture that so may of us have freedom to search for our own life’s work.”

We have found that a majority of those who do not possess this freedom have also compromised their freedom in the realm of financial decisions. By borrowing and spending too much, by making ill-guided investment choices and strategies, and by neglecting to bring their financial lives under analysis and control, these individuals have delayed or abandoned their quest for meaning. This is where a good financial life planner can make all the difference in the world. First, help clients think about locating the intersection where meaning will be found. Second, help clients align their financial lives with the objective of reaching that destination. Without a clear vision of the destination, the process rings hollow and will be compromised by every impulsive whim and wind of influence.

Excerpted from Your Clients for Life: The Definitive Guide to Becoming a Successful Financial Life Planner, Second Edition by Mitch Anthony. (©2006 by Mitch Anthony. Published by Kaplan Publishing

Consumer Alerts

The US Consumer Product Safety Commission has an alert service you can subscribe to that will send you their latest recalls and warnings as they are released. They categorize them so you can subscribe to only the type you are interested in (e.g., child products).

http://www.cpsc.gov/cpsclist.asp

Welcome

Welcome to my blogspot. This will be a great way for us to get information to you that we think is important and can make a difference in your life. So, please make it a habit to check here at least weekly. No--I will not be blogging every day! So, bookmark it to your favorites. See you back here soon.